Read this article in:
11 December, 2006
On 30 November, the Conseil Constitutionnel in France took a decision that postpones the merger plans of two European energy giants, Gaz de France (GDF) and Suez Group, by at least another seven months. The constitutional court ruled that, since GDF is a public service, the merger cannot go forward before 1 July 2007, which is when the French gas market opens up for competition.
French trade unions had already managed, through earlier legal encounters, to postpone the merger until 2007. (See: /en/78-ICEM-InBrief/2047-Unions-Win-Important-Legal-Battle-in-GDF-Suez-Merger-Saga)
Many observers and experts, including large portions of the investment community, now believe that the GDF-Suez merger may not happen at all. One major reason behind this thinking is that this latest court decision postpones a possible merger until well after the presidential elections in France, which take place in the spring of 2007. The French Socialist Party, currently in opposition, has said it will stop the merger if it wins.
The Constitutional Council did, however, validate the article of the energy law that allows GDF to be privatised. FNME-CGT, the majority trade union at GDF, now seeks another reading of that law before the French Parliament. The union argues that the Council changed the text of the law, which means it is no longer the same text that had been adopted by Parliament.
Unions in France have been resisting the privatisation of GDF through the merger with Suez from the very beginning. The State of France currently holds 80.2% of GDF. In the event of a merger with Franco-Belgian Suez Group, that ownership stake would be reduced to 34%.